DOJ issues guidelines on unlawful employment practices for federal contractors

When President Donald Trump issued Executive Order (EO) 14173—“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”—earlier this year, what grabbed headlines was the repeal of EO 11246, which had mandated that federal contractors meeting certain size criteria develop affirmative action plans since 1965. EO 14173 also created two new certifications on the system for award management (SAM) that may have an even greater effect on federal contractors than the repeal of affirmative action.

Material Certifications

Federal contractors—including recipients of federal grants and almost all primary, secondary, and post-secondary schools—now have to certify annually that they do not “operate programs promoting [diversity, equity, and inclusion (DEI)] that violate any applicable Federal anti-discrimination laws” and that they are “in compliance in all respects with all applicable Federal anti-discrimination laws.”

The government considers both of these certifications material—meaning that a false certification can open a federal contractor up to liability under the False Claims Act (FCA). Civil penalties under the FCA can conceivably include being forced to repay three times anything the government paid a contractor over the course of the false certification year. The FCA also provides healthy incentives to whistleblowers, including up to 30% of anything the government recovers from the contractor.

Administration’s targets and priorities